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Jabil Circuit (JBL) Q2 Earnings & Revenues Beat Estimates

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Jabil Circuit Inc.(JBL - Free Report) reported better-than-expected second-quarter fiscal 2017 results. Adjusted earnings (including share-based compensation but excluding all one-items) of 40 cents per share surpassed the Zacks Consensus Estimate of 36 cents.

Quarter Details

Revenues of $4.45 billion also beat the Zacks Consensus Estimate of $4.37 billion and were higher than the prior-year quarter’s figure of $4.40 billion.

Electronics manufacturing services revenues (representing 60% of revenues) came in at about $2.7 billion, up 1% year over year. Diversified Manufacturing Services revenues (40% of revenues) increased 1% year over year to $1.8 billion.

Jabil Circuit, Inc. Price, Consensus and EPS Surprise

Jabil Circuit, Inc. Price, Consensus and EPS Surprise | Jabil Circuit, Inc. Quote

Operating Details

Gross margin contracted nearly 100 bps on a year-over-year basis to 8.1%.

The company’s operating income decreased 43.3% year on year to $83.2 million.

Balance Sheet & Cash Flow

Exiting the quarter, cash and cash equivalents were $755.1 million, compared with $912.1 million as of Aug 31, 2016.

Cash flow from operations for the first six months of the year was $346.2 million compared with $72.7 million in the year-ago period.

Restructuring Program

The company continued with its plans to realign its global capacity and administrative support infrastructure so as to optimize organizational effectiveness amid a sluggish macroeconomic scenario. The company is progressing with its efforts to improve organizational efficiency and effectiveness as planned. The company incurred $45 million of restructuring expenses.

Guidance

The company initiated guidance for the third quarter of fiscal 2017.

For the third quarter, Jabil expects total company net revenue to increase 2% (at mid point) year over year and be in the range of $4.25 billion to $4.55 billion. Core operating income is estimated in a range of $90 million to $130 million.

On a year-over-year basis, revenues from Diversified Manufacturing are expected to increase 9% to $1.6 billion.

Electronics Manufacturing Services revenues are expected to decrease 1% on a year-over-year basis to $2.8 billion.

On a GAAP basis, the company expects to report loss in a range of 3 cents to 34 cents per share. On the other hand, the company is expected to post earnings in the range of 19 cents to 39 cents per share on a non GAAP basis.

Currently, Jabil Circuit has a Zacks Rank #3 (Hold). Notably, shares of Jabil Circuit have underperformed the Zacks Electronics - Manufacturing Servicesindustry over the last one year. While the industry gained 41.8%, the stock appreciated 22.9%.

Price Return Performance Chart

Better-ranked stocks in the broader tech space include Tech data Corp , ADTRAN Inc. (ADTN - Free Report) and Applied Materials, Inc. (AMAT - Free Report) . Tech Data sports a Zacks Rank #1 (Strong Buy) while ADTRAN and Applied Materials carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tech Data has delivered an average positive earnings surprise of 8.73% in the trailing four quarters while ADTRAN and Applied Materials have delivered positive earnings surprises of 35.82% and 3.92%, respectively over the same time frame.

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